Turnaround Update: Achieving Higher Margins and Greater Competitive Advantage

Situation

A commercial fixtures manufacturer had suffered a $1.2 million balance sheet deficiency nearly two years ago.With Platinum’s help to restructure the business, the owners achieved more highly profitable operations. Early decisions served to drive down expenses and increase operational efficiencies. After six months of stability, the company continued to seek higher margins and greater competitive advantage.

Challenges

• Outsourcing was cutting into the revenue stream and resulted in less control and slower turnaround.
• Going back to the company’s lender for new financing was in doubt.
• The owners wanted help to solidify the company’s position for the future.

Solution

Platinum continued to advise and mentor the owners to gain the next level of high-margin profitability.To help build revenue stream, a new process was developed and deployed that allowed the manufacturer to bring certain work inside in lieu of outsourcing. This process positioned the company as a one-stop-shop for customers, added faster order turnaround and negotiated a favorable supplier distribution agreement. Given the enhanced financial performance and restructured business, new market rate financing was secured for all credit lines with the original lender. Platinum also helped to negotiate an exclusive rights agreement to distribute certain products in the marketplace that will solidify the company’s market position going forward.

Results

• The new process achieved a quick payback within three months —a 60% contribution margin.
• The refinance established a proper capital structure for the future.
• And the new process and marketing agreement have set the stage for improved competitive advantage that will continue to grow revenue and drive greater margins for the future.